Baker Hughes'

(BHI)

fourth-quarter profit increase of 8% came in ahead of Wall Street estimates, but the oilfield services provider has a dour outlook for 2009.

The company's shares were higher in recent trading, up $3.23 to $36, almost 10%.

Earnings were $432 million, or $1.41 per share, up from $401 million, or $1.26 per share, a year earlier.

Quarterly revenue rose 16% to $3.19 billion, up from $2.74 billion in 2007.

Analysts polled by Thomson Reuters, on average, forecast EPS of $1.26 on revenue of $3.05 billion.

For all of 2008, Baker Hughes' earnings totaled $1.64 billion, or $5.30 per share, on $11.86 billion of revenue. It earned $1.51 billion, or $4.73 per share, on $10.43 billion of revenue in 2007.

The Houston-based company, which announced 1,500 layoffs earlier this week, has seen rig counts drop 25% in North America, which leaves it open to more layoffs.

"Looking forward, the outlook for 2009 has continued to deteriorate," said Chad C. Deaton, chairman and CEO. "The global economic recession, lower oil prices, and reduced access to credit will negatively impact customer spending globally. Many of our international customers are trimming their exploration plans, giving priority to spending on production and development.

"In North America, where the U.S. rig count has already fallen 25% from peak, customers are continuing to reduce their budgets to address an oversupplied gas market. The depth and duration of the cycle remains uncertain, dependent in part on the timing of the recovery of the global economy.

Baker Hughes' competitors

Halliburton

(HAL) - Get Report

and

Schlumberger

(SLB) - Get Report

both reported reduced profits in the fourth quarter.

This article was written by a staff member of TheStreet.com.